Saturday, August 21, 2010

M4 Money Supply economics supports the right of China to control the sale of the Yuan

How China's Safe filled up with trillions of our deposit currency credits
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It is impressive that China has worked hard and constructed an armada of international bank accounts.

How it works. Yuan is controlled, not allowed to sell it for international currency, only China's Central Bank can sell Yuan for international currency. China by placing a fraction of its workforce of a quarter of mankind to export, has created a demand by China's exporting companies to acquire Yuan to pay wages etc. China's Central Bank -- Safe State administration of foreign reserves stock piles the international currency it sells for Yuan. http://www.safe.gov.cn/model_safe_en/index.jsp

Western media misunderstanding currency trade dynamics, and that the Yuan is under valued. [Traditional economic wisdom that a cheaper currency creates more exports is not what China is doing, yet Western Media presents it that way. ] http://www.bloomberg.com/news/2010-06-19/geithner-welcomes-china-s-yuan-move-calls-for-vigorous-implementation-.html It is in fact overvalued. China controls inflation by overinflated the Yuan given to Chinese exporters. Cheaper for the Central Bank to buy foreign currency of China's exporters needing Yuan with over valued Yuan. [Very important to China to control inflation by limiting any depreciation, and not increase cost to buy foreign currency.] [Not all roses in China, as concern that wages have been repressed. [Massive working poor. More wages increase, the more Yuan exporters need.]